The Essential Contract Clauses Every South American Trader Needs When Dealing with U.S. Buyers

Expanding your business into the U.S. market is an exciting opportunity, but it comes with its challenges. U.S. contracts are governed by legal principles that can differ significantly from those in South America. Without precise agreements in place, misunderstandings with buyers can quickly become costly legal disputes.

To protect your business, certain contract clauses are non-negotiable. This guide will walk you through the essential clauses every South American trader should include when entering agreements with U.S. buyers, explained clearly and practically.

What Payment Terms Should I Include in a Contract With a U.S. Buyer?

Payment terms are one of the most common sources of conflict in international trade. Your contract should clearly define:

• Currency and Method of Payment: Specify whether payment will be in USD or another currency, and outline acceptable methods such as wire transfers, letters of credit, or online payment platforms.
• Timing and Deadlines: Include exact due dates for initial deposits, milestone payments, or full balances.
• Late Payment Penalties: Consider including interest rates or fees for overdue payments to discourage delays.

Clear payment terms ensure both parties know exactly what is expected, reducing the risk of financial disputes.

How Do I Protect My Goods During Shipping to the U.S.?

Shipping internationally introduces risk, so contracts must specify who is responsible for the goods at each stage. Key clauses include:

• Incoterms (International Commercial Terms): Specify delivery obligations such as FOB (Free On Board) or CIF (Cost, Insurance, and Freight). This determines when risk passes from seller to buyer.
• Insurance Requirements: Require that the buyer or seller obtains insurance to cover loss or damage during transit.
• Inspection Rights: Allow the buyer to inspect goods upon delivery and set procedures for addressing defects.

These provisions protect you if the goods are damaged or lost before reaching the buyer.

How Can I Handle Disputes With a U.S. Buyer?

Even with the best planning, disputes may arise. A well-crafted contract reduces the risk of litigation and ensures disputes are resolved efficiently, including:

• Governing Law Clause: Clearly state which state’s laws apply to the contract. For example, Florida law may be preferable if you have legal support there.
• Dispute Resolution Clause: Specify whether disputes will be resolved through mediation, arbitration, or litigation.
• Jurisdiction and Venue: Identify the courts or arbitration panels where disputes will be heard to avoid uncertainty.

By addressing disputes upfront, you can prevent costly delays and enforce your rights more easily.

What Should I Include About Warranties and Product Specifications?

Misunderstandings about product quality are a common source of conflict. Include clauses that cover:

• Product Specifications: Clearly define the type, quantity, and quality of goods. Include tolerances or acceptable variations if necessary.
• Warranty Limitations: Outline what is covered under warranty and any conditions or time limits.
• Liability Limitations: Limit exposure for indirect or consequential damages.

These clauses help set realistic expectations and minimize legal exposure.

Why Are Termination and Force Majeure Clauses Important for International Trade?

Global trade comes with uncertainties. Include clauses that address:

• Termination: Define circumstances under which either party can end the contract, including breach or failure to perform.
• Force Majeure: Protects parties from liability in cases of unforeseen events like natural disasters, strikes, or political unrest that make performance impossible.

Having these clauses clearly defined ensures both sides understand the risks and remedies if the unexpected occurs.

How Can I Make Sure U.S. Buyers Respect My Intellectual Property?

If your goods involve proprietary designs or technology, include clauses that protect your intellectual property:

• Ownership Rights: Clarify that all IP remains with the seller.
• Restrictions on Use: Limit how the buyer can use or reproduce your products.
• Confidentiality Requirements: Protect trade secrets and sensitive business information.

These clauses prevent misuse and reinforce your legal rights in the U.S. market.

Conclusion: Protect Your Business With the Right Legal Expertise

Selling to U.S. buyers can be highly profitable, but contracts are your first line of defense against disputes, non-payment, or unexpected liabilities. Including these essential clauses ensures that your transactions are secure, enforceable, and clear for both parties. Our attorneys at Ayala Law specialize in guiding South American traders through U.S. contracts and international business law.

Don’t leave your business at risk, contact one of our experienced attorneys in Miami at 305-570-2208.

You can also contact our founding attorney Eduardo A. Maura at eduardo@ayalalawpa.com.

Schedule a case evaluation online here.

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].